Death Valley is in California. Besides its reputation for summertime temperatures of 120 degrees, it’s also known as the lowest spot in the USA – 282 feet below sea level. Following the recession in 2008-09, the yield on the 10-year Treasury took a trip to Death Valley, falling to just 1.37% in July 2016 (St. Louis Federal Reserve). Put another way, you could lend Uncle Sam cash for 10 years and earn 1.37% per year.

As Figure 1 illustrates, the yield was the lowest in over 100 years. In fact, July’s bottom is the lowest in the history of the Republic, according to BofA Merrill Lynch. Notably, the spike in yields in the 1970s was an anomaly when viewed from a long-term perceptive.

The Dow Jones Industrials fell 831 points, or 3.3%, on Wednesday (WSJ). Thursday saw a 546-point drop. A 1,175-point decline (4.6%) on February 5, followed by a 1,032-point drop (4.2%) on February 8, are the largest (St Louis Federal Reserve).

1. The economy is expanding at a solid pace; recent data have been strong.2. Q1 and Q2 profits were strong and Q3 is looking very upbeat3. Inflation isn't showing signs of accelerating.4. Interest rates remain low (10-year Treasury at levels not seen since the late 1950s, excluding recent years).